How to calculate the carbon footprint of a company?

Detailed measurement is the foundation for improvement: without a precise understanding of a company’s greenhouse gas emissions, it is impossible to develop an effective decarbonization strategy.

This guide explains how to calculate a company’s carbon footprint, outlining the steps involved in calculating a company’s CO2 emissions, the key standards to follow, and how to interpret the results of the calculation with a view toward decarbonization.

What Is a Corporate Carbon Footprint? (In a Nutshell)

A company’s carbon footprint, or organizational carbon footprint (CFO), represents the total greenhouse gas emissions associated with a company’s activities.

In fact, every business activity leaves a mark on the climate. Consuming energy, purchasing raw materials, transporting goods, and generating waste—all of these activities contribute to greenhouse gas emissions that drive climate change.

Calculating an organization’s carbon footprint serves precisely to measure this footprint accurately.

A company’s carbon footprint should not be confused with a product’s carbon footprint, which measures the emissions associated with a specific good or service throughout its life cycle.

How do companies measure their carbon footprint? Step by Step Guide

Calculating a company’s carbon footprint makes it possible to quantify the emissions generated directly by the company’s activities and those produced indirectly throughout its value chain.

The same principle applies to every emission source: an activity metric—such as liters of fuel consumed, kWh of electricity purchased, or kilometers traveled—is multiplied by the corresponding emission factor.

Activity data × Emission factor = Emissions (in CO₂e)

The sum of the emissions calculated in this way for all emission sources constitutesthe company’s GHG inventory.

Let’s now look at the three main phases involved in analyzing a company’s CO₂ emissions at the operational level:

1. Defining the scope of the measurement

Before collecting data, it is necessary to determine precisely what to include in the calculation. Defining the scope involves two different decisions.

The first concerns the organizational scope: the company must determine which subsidiaries, offices, plants, and operations to include. The calculation may cover, for example, a single office, a subsidiary, or an entire group.

The second concerns the scope of emissions:

• Scope 1 includes emissions generated directly by facilities, processes, and vehicles controlled by the company;
• Scope 2 includes indirect emissions associated with purchased and consumed energy, such as electricity, heat, or steam;
• Scope 3 includes other indirect emissions generated along the value chain, both upstream and downstream: material procurement, transportation, business travel, employee commuting, product use, and end-of-life disposal.

In some cases, the initial assessment may focus on Scope 1 and Scope 2. However, when the goal is to determine the carbon footprint of the entire organization, develop a decarbonization plan, or meet specific reporting requirements, it is also necessary to analyze Scope 3 and identify the most significant categories.

2. Data Collection

Once the scope has been defined, data is collected on the activities that generate emissions: fuel and energy consumption, refrigerant gas leaks, transportation, travel, material purchases, waste generation, and other relevant activities.

The quality of the results depends largely on the completeness, traceability, and reliability of the data collected. When primary data are not available, estimates, average data, or proxy data may be used, provided their use is adequately documented.

3. Calculation and Analysis of Emissions

Activity data are multiplied by specific emission factors, which indicate the amount of greenhouse gases associated with each activity, material, or energy source.

Emission factors are obtained from nationally or internationally recognized databases, such as the IPCC for the global warming potentials (GWPs) of various greenhouse gases,ISPRA for electricity emission factors in Italy, DEFRA in the United Kingdom, etc. Furthermore, when calculating emissions associated with purchased energy (Scope 2), it is necessary to distinguish between the location-based and market-based approaches, which can influence the result.

Calculating the company’s CO₂ emissions thus makes it possible to create an inventory expressed in CO₂e and to identify emission hotspots—that is, the activities that contribute most to the company’s overall carbon footprint.

What standards are used to calculate a company’s carbon footprint?

To ensure accurate, transparent, and comparable measurements, an organization’s carbon footprint can be calculated using two main international standards: the GHG Protocol and ISO 14064-1.

GHG Protocol

The GHG Protocol classifies emissions into three categories: Scope 1, Scope 2, and Scope 3. It is the most widely used framework for climate reporting, setting reduction targets, and analyzing emissions along the value chain.

The GHG Protocol is the methodological standard required by frameworks such as the Science Based Targets initiative (SBTi)—the organization that helps companies set emissions reduction targets aligned with climate science and the Net Zero goal—or in the CDP (Carbon Disclosure Project) questionnaire.

ISO 14064-1

ISO 14064-1 is the other technical standard for quantifying and reporting greenhouse gas emissions and removals at the organizational level.

The classification used by the standard differs from that of the GHG Protocol, but it still allows for the distinction between direct emissions, emissions relatedto purchased energy, and other indirect emissions.

An inventory prepared in accordance with ISO 14064-1 may also be subject to an independent verification.

For which companies is calculating their carbon footprint mandatory?

The main regulatory requirement relates to the CSRD Directive, which generally applies to companies and groups that exceed both thresholds of 1,000 average employees and 450 million euros in net revenue.

For these companies, calculating Scope 1, Scope 2, and Scope 3 emissions becomes necessary when climate change has been identified as a material issue in the double materiality analysis.

For companies not subject to the CSRD, the carbon footprint may still be required by clients, stakeholder groups, investors, calls for proposals, and ESG rating systems.

For more information on thresholds and deadlines, see the guide on sustainability reporting requirements.

After the calculation: from emission hotspots to the reduction plan

Calculating a company’s carbon footprint is not the end goal, but rather the foundation for deciding where to take action and what the priorities should be.

In fact, this measurement makes it possible to identify emission hotspots and focus resources and investments on activities that can yield the most significant reductions.

Develop a decarbonization plan

Based on the results of the carbon footprint assessment, the company can develop a decarbonization plan that includes actions, responsibilities, investments, metrics, and deadlines.

Possible measures include reducing energy consumption, electrifying processes, using renewable energy, optimizing logistics, changing the materials used, and involving suppliers.

Setting Climate Goals with the SBTi

An organization’s carbon footprint can also be used as a basis for setting reduction targets consistent with climate science and submitting them for validation by the Science Based Targets initiative.

Achieving Carbon Neutrality in Accordance with ISO 14068

Another approach is carbon neutrality. ISO 14068-1 establishes a hierarchy according to which an organization must first quantify and reduce emissions, then increase removals, and only resort to offsetting for residual emissions.

Carbon neutrality should therefore not replace emissions reduction, but rather be the culmination of a structured process of management and decarbonization.

How can we support you?

Calculating a company’s carbon footprint—or an organization’s carbon footprint—allows you to understand how much emissions the company generates, identify the activities with the greatest impact, and set concrete priorities for action.

Ollum helps companies calculate their organizational carbon footprint in accordance with leading international standards, both through the GHG Protocol and in accordance with ISO 14064-1.

For companies that wish to have their inventory independently verified, we also offer a specialized service to support ISO 14064-1 certification.

A carbon footprint can also be developed as part of sustainability reporting in accordance with the ESRS, or used as a basis for developing a decarbonization plan, setting climate goals, and monitoring progress over time.

Without measurement, there can be no improvement: knowing your emissions is the first step toward reducing them in a credible, structured, and verifiable way.